What Happens if I File My Bankruptcy in the Wrong Bankruptcy District?

Fortunately for debtors filing bankruptcy in Colorado, there is only one bankruptcy court district. That makes figuring out which district to file in quite a bit easier than for folks in states like California or New York. Nevertheless, if a debtor files in Colorado before he or she has lived in this state long enough, the case might get moved to the proper district or even dismissed.

Under Bankruptcy Rule 1014(a)(2),

If a petition is filed in an improper district, the court, on the timely motion of a party in interest or on its own motion, and after hearing on notice to the petitioners, the United States trustee, and other entities as directed by the court, may dismiss the case or transfer it to any other district if the court determines that transfer is in the interest of justice or for the convenience of the parties.

What that means is that a creditor, or even the court on its own, can have the case dismissed or have it transferred to the proper district. If your case is dismissed, you’ll lost the protection of the bankruptcy laws, and creditors will be able to resume their collection efforts.

Making sure that your case is filed in the right district – including the right state – is just one more reason you should consider talking to an attorney.